It’s been a slow drip down in early European trade today as equity markets gave up their early Asia session gains and moved lower all morning on the realization that the coronavirus impact may be a long and tedious battle.

The rate of infection in the US appears to be ticking up with California now declaring a state of emergency as it monitors more than 9000 possible cases. Airlines have continued to issue warnings as travel may be off by as much 70%, And with swaths of China and parts of Europe still on effective lockdown, the rebound in economic activity may take longer than hoped.

All of this has put a damper on investor sentiment and futures were pointing to a 2% down open after yesterday’s 4% rise. The up-down nature of the markets will no doubt continue but the prospect of fresh will grow dimmer with every passing day as investors begin to take the true toll of the virus on economic activity.

In FX the euro continued to push higher rising to 1.1177 in morning London dealing. The move is less a function of confidence in the euro than flow out of dollar assets. With markets pricing in yet another 50bp cut by the Fed the one attraction of US assets – their positive yield – is losing much of its luster.

If the coronavirus forces all the G-3 rates to normalize around zero much of the greenback’s advantage will evaporate. Add to that the fact that euro is now a funding currency in many risk trades that will need to be unwound and that CFTC positioning still suggests a strong short bias and you have the perfect recipe for a vertical move to 1.1400 or higher.

Author

Boris Schlossberg

BKTraders and Prop Traders Edge

Boris Schlossberg was key speaker at the FXstreet.com International Traders Conferences 2010. Mr. Boris Schlossberg is a leading foreign exchange expert with more than 20 years of financial market experience.

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.

Gold remains on the back foot below $3,900

Gold now alternates gains with losses below the $3,900 mark per troy ounce on Friday. The precious metal struggles to regain traction amid the firmer US Dollar, mixed US Treasury yields and expectations of further tightening by the Fed at its December meeting.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850

Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.